Dentsu Forecasts U.S. Ad Spending To Grow Nearly 4% This Year.

Resilient – that is how the advertising conglomerate Dentsu Aegis Network describes radio in its annual global media outlook. It projects radio will bounce back with a 4.7% increase in ad revenue this year across the 59 markets it tracks.

For forecasters, there is no way of getting around the reality that 2020 was unlike anything they expected. A year ago, Dentsu’s report talked up the impact of smart speakers and projected U.S. radio would grow 2.3% which would have been ahead of the forecasted global 1.7% increase. Instead Dentsu says by its tally, global radio ad spending on radio fell 10.1% last year.

Because radio was not alone in feeling the pinch of a global advertiser pullback, the medium’s share of the advertising pie did not shrink as much as the drop in ad sales might suggest. In the countries tracked by Dentsu, it says radio’s share of advertiser spending last year was 5.8%. That was down just two-tenths of a point from a year earlier. And forecasters think radio’s share will hold firm in 2021.

Dentsu also points out that radio overtook newspaper’s share of the ad pie last year, despite the challenges created by many commuters no longer listening to radio to-and-from work. “The industry has been supported through government spending and some category increases,” the report says.

Dentsu expects overall U.S. ad spending will increase 3.8% this year after what it calculates was a 7.5% decline last year. “Following declining ad spend in 2020, growth is expected to return to the U.S. ad market from Q1 2021,” the report says. It estimates a quarter of all new ad dollars spent worldwide this year will be in the U.S.

Yet global ad spending is forecast to grow at a faster pace. Dentsu estimates a 5.8% recovery in spending after an 8.8% drop last year. The pandemic ended a decade of consecutive annual growth dating back to the end of the financial crisis of 2009. Several factors remain unsettled though, such as whether the Tokyo Summer Olympics will be held as scheduled.

Travel is poised to be the biggest comeback ad category this year, with Dentsu forecasting ad spending in the category to be up 28%. That is nearly double the 15% growth rate projected for ad spending in the media and entertainment category. And car ad budgets are likely be increase 14%, according to its report, which also projects growth in the finance (+6%), retail (+5%), telecom (+5%), and pharmaceutical (+2%) ad categories.

Looking ahead to the months to come, Dentsu said the biggest challenge will be understanding which changes brought about by COVID-19 are permanent and which are only temporary. “While we expect a gradual return to normality as lockdowns ease in 2021, the impact on media consumption behaviors is likely to endure,” it says.